Commercial Sublease Agreement FAQ - United States

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A sublease is a legally binding contract made between a tenant and a new tenant (also known as a subtenant or a sublessee). The sublease gives the subtenant the right to share or to take over the rented premises from the first tenant. The subtenant pays rent directly to the first tenant while the first tenant pays rent directly to the landlord. The landlord still holds the first tenant directly responsible for the rent and for any damage, including any caused by the subtenant. Usually, the first tenant must get consent from the landlord before he/she is allowed to sublease the premises. LawDepot offers a written Commercial Sublease Agreement.

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Contents

Definitions

What does "Automatic Renewal" mean?

Automatic renewal means that the lease continues indefinitely on the agreed upon interval (weekly, monthly, or yearly) until either the Subtenant or the Sublandlord gives notice to the other party that they will be terminating the sublease.

What is a check-in inspection form?

The check-in inspection form is completed by the Subtenant within a reasonable amount of time after the Subtenant takes possession of the property. This form will contain a description of the condition of the property at the time of the Subtenant's possession, and will be used at the end of the sublease term as a comparison tool to determine if the Subtenant caused any damage to the property.

What is a damage deposit?

The damage deposit is money that the Subtenant pays to the Sublandlord at the start of the sublease term, which the Sublandlord will use to cover the costs of any repairs caused by the Subtenant that need to be done to the property at the end of the sublease term, after the Subtenant has vacated the premises. If some of the damage deposit still remains after all repairs are completed, the remainder of the damage deposit will be returned to the Subtenant, or if there are no repairs that need to be done to the property, then all of the damage deposit will be returned to the Subtenant.

What is the Master/Original Lease?

This is the original lease that the Sublandlord (the tenant in the original lease) entered into with the Landlord and from which the Subtenant's interest will be created. It can also be known as a master lease which governs all the subleases under it.

Who is the Sublandlord?

The Sublandlord or Sublessor is the person that entered into a lease with the original Landlord, and who is now leasing all or part of the Landlord's property to the Subtenant.

Who is the Subtenant?

The Subtenant or Sublessee is the person who is entering into a lease for some or all of the Landlord's property from the Sublandlord (the original Tenant).


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Sublease Information

What is the governing law of my Sublease?

The governing law will be the jurisdiction in which the property is located, regardless of which jurisdictions the Sublandlord and Subtenant reside.

Do I need to provide the Subtenant with a copy of the Master Lease?

Yes, the Subtenant is entitled to a copy of the Master Lease. The Sublandlord can include a copy of the Master Lease with the Sublease Agreement, or can deliver a copy directly to the Subtenant.

Can I sublease a portion of the property rather than the entire property?

Yes, you can sublease a part or all of the leased premises to the Subtenant.

Should the Subtenant have insurance?

It is strongly advised that the Property should be insured. However, the Subtenant does not need to have their own insurance if the Sublandlord has obtained sufficient insurance to cover the Subtenant.

How many days should the Subtenant be given to complete a check-in inspection form?

There is no statutory minimum amount of time, but the Sublandlord should give the Subtenant a reasonable amount of time. Depending on the circumstances under which the Subtenant will take possession, a reasonable period of time would likely be between 7 and 30 days.

How much should the damage deposit be?

Damage deposits are usually equivalent to the value of one month's rent, but can be any amount that the Sublandlord decides upon in a commercial setting.

Can I restrict what alterations the Subtenant is allowed to make to the property?

Yes, the Sublandlord can determine the extent to which the Subtenant can make alterations. The Sublandlord may reduce the Subtenant's right to make improvements from the level established for the Sublandlord in the Master Lease, but the Sublandlord cannot increase the Subtenant's right to make alterations beyond the level outlined in the Master Lease.

What additional purposes can the Subtenant make of the property?

The Sublandlord can only authorize the Subtenant to use the property for purposes that have been approved by the Landlord. Before allowing the Subtenant to use the property for additional purposes that are not stated in the Master Lease, the Sublandlord needs to obtain the consent of the Landlord.

Do I need to create the Landlord's Consent to Sublease?

The Landlord's Consent to Sublease should only be included in the Sublease Agreement if the Landlord has not previously provided written consent to the sublease.

I do not know when the Sublease will be signed. Can I fill in the date later?

Yes, by selecting 'Unsure' as the date the agreement will be signed, a blank line will be inserted into the lease so that you can add the correct date after printing the document.

Who should sign the Sublease?

Both the Sublandlord and the Subtenant should sign the Sublease, and it is strongly recommended that at least 2 witnesses also sign it.


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